ILLINOIS TAX DEADBEATS MAY FACE WEB OF SHAME

Ray Long, Tribune Staff WriterCHICAGO TRIBUNE

Illinois is trying to coax tax deadbeats into paying up by threatening them with high-tech humiliation.

Taking advantage of a new state law, the Department of Revenue plans to post the names of its biggest tax delinquents on the Internet as early as this summer. The move will put Illinois among a handful of states using the Internet to crack down on deadbeats.

Since 1996, Connecticut's on-line program has led to collection of nearly $52 million from the "most recalcitrant and reluctant taxpayers," said Ellen Schneider, spokeswoman for the Connecticut Department of Revenue Services. The folks there simply call it "Cybershame."

"It's the public stockade of the Cyber Age," Schneider said. "We've had individuals come in with checks of $25,000 and said, `Well, you've finally gotten tough.' "

In Illinois, 5,200 delinquent taxpayers were sent notices by certified mail last week that they must pay up or have their names made public later this year. The 1,392 individuals and approximately 3,800 business-related entities owe the state more than $272 million for a variety of delinquent bills, ranging from sales taxes to individual and corporate taxes to cigarette taxes.

Altogether, taxpayers owe the state more than $1 billion. But for a name to be made public under the new program, a delinquent taxpayer must have owed the state at least $10,000 for six months or more.

For a business, the biggest tax deadbeat owes $13.3 million. And one individual sent a notice owes $602,000 in personal income taxes.

Illinois Department of Revenue Director Glen Bower shied away from comparing the Internet list to humiliating people into paying. Bower put it this way, "I don't think anybody would want to have their name on the debtors' list."

State officials hope to get the deadbeats to pay before their names are made public.

They are taking the action just weeks before the April 15 filing deadline and as the U.S. Internal Revenue Service is supposed to be trying a gentler approach with federal taxpayers.

Still, it is unclear how well the tactic of public humiliation will work in Illinois.

During a pilot program in November, the state sent notices to 500 of the top delinquent taxpayers and informed them that they would qualify to be on a public list.

After that, the agency collected $112,213 from only 19 taxpayers. Three others who owed $69,000 began payment plans. An additional 33 had a total of more than $1.1 million wiped off the books for money they did not owe, in part because they produced information for tax officials that they would not reveal in the past.

The pilot program cost about $38,000, a return of about $3 for each one invested.

An attempt by former Gov. Jim Edgar to shame deadbeat dads into paying child support by putting their faces on wanted posters turned into an embarrassment. It took only a few phone calls to locate the first child-support deadbeat that the governor had said could not be found by state officials.

Bower acknowledged that a number of the 5,200 targeted entities may be bankrupt or have tax liabilities that are uncollectible. The oldest case, involving a development company that owes $10.5 million in back taxes, dates to 1975.

The most common types of businesses on the delinquent list are building contractors and construction companies. For example, notices went to 64 companies that built single-family homes and to 33 concrete contractors.

State revenue officials received authority, though not a mandate, to make the names of deadbeats public in a state law that legislators passed overwhelmingly and that took effect Jan. 1. Bower said he chose to go ahead because it is another tool to use against taxpayers who had "numerous, numerous" opportunities to pay up.

Sponsoring Sen. William Peterson (R-Long Grove) cautioned there is "only so much money you can collect. What this will do is speed up collections."

Along with the Internet, the Department of Revenue plans to identify deadbeats by disseminating press releases and by making lists available for public inspection in agency offices, said spokesman Michael Klemens.

Illinois mailed the 5,200 notices March 31 and the deadbeats have 60 days to respond. By law, the state will wait until at least June 30 to publish the names.

The delay is a safeguard aimed at calming fears the state might misidentify people. Even so, the law says that any disclosure the department makes in good faith won't be considered a violation of taxpayer confidentiality.

The Illinois chapter of the American Civil Liberties Union had no problems about releasing the identities as long as the information is stated correctly, said Tracey Robinson, an ACLU spokeswoman. People should know such information about tax delinquents, she said.

Only a few other states have adopted similar policies.

In Connecticut, refusal to pay taxes had long been viewed practically as a "gentleman's sport," Schneider said. "But once their names got posted, they realized it could have a serious negative impact on their business reputations."

She said Connecticut posts the 100 top tax delinquents each month--and when companies and individuals receive letters warning that they are in danger of joining the list, even more cash rolls in.